Vanegas v. Signet Builders, Inc.

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JOSE AGEO LUNA VANEGAS, on behalf of himself and all others similarly situated, Plaintiff, v. SIGNET BUILDERS, INC., Defendant.

No. 21-cv-54-jdp

United States District Court, W.D. Wisconsin

August 2, 2023

OPINION AND ORDER

JAMES D. PETERSON, District Judge

Plaintiff Jose Aego Luna Vanegas alleges that defendant Signet Builders, Inc., violated his rights under the Fair Labor Standards Act by failing to pay him overtime for construction work that he performed on farms. Two matters are before the court. First, Luna Vanegas asks to amend his complaint to add a new plaintiff and new claims and defendants. Dkt. 92. Second, Luna Vanegas has renewed his motion for conditional certification of an FLSA collective of Signet employees who worked on “agricultural construction projects.” Dkt. 83. He also asks the court to approve notice to the collective. Id. Signet raises a host of objections to both motions.

The court will grant Luna Vanegas's motions. Luna Vanegas's amended complaint states plausible claims for relief, and he has made the modest showing necessary to conditionally certify the collective. Signet's arguments in opposition to the motions are based on affirmative defenses and disputed facts. These are premature; the issues Signet identifies will be resolved later in the litigation. The court will accept Luna Vanegas's amended complaint and conditionally certify the collective. Luna Vanegas's proposed notice will be approved, with adjustments to improve accuracy and clarity.

BACKGROUND

Plaintiff Jose Ageo Luna Vanegas filed this lawsuit in January 2021. Luna Vanegas is a citizen of Mexico. Vanegas alleged that between 2004 and 2019, he worked for Signet under an H-2A guestworker visa, which allows citizens of other countries to perform agricultural work in the United States on a temporary basis. Signet is a construction company that contracted to build “livestock confinement structures” on farms in Wisconsin, Iowa, Indiana, and other states. Dkt. 1, ¶ 16. Vanegas frequently worked more than 40 hours per week but Signet did not pay him overtime wages. Vanegas contended that Signet's failure to pay him overtime violated his rights under the Fair Labor Standards Act (FLSA), which requires employers to pay workers at a rate of at least one and one-half times their regular rate of pay for each hour they work beyond 40 in a workweek. 29 U.S.C. § 207(a)(1). Vanegas moved for conditional certification of an FLSA collective of Signet workers who worked under a guestworker visa. Dkt. 15.

Signet moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Signet based its motion on the affirmative defense that Luna Vanegas's work, as described in the complaint, fell under the FLSA's exemption for “employee[s] employed in agriculture.” 29 U.S.C. § 213(b)(12). The court agreed with Signet that Luna Vanegas's allegations showed that his work was incidental to the agricultural activity of raising livestock, so his work fell within the agricultural exemption. Dkt. 52. The court denied Luna Vanegas's motion for conditional certification of an FLSA collective as moot and dismissed the case.

Luna Vanegas successfully appealed. The court of appeals concluded that the allegations in the complaint did not conclusively establish that Luna Vanegas's work fell within the agricultural exemption, so Signet was not entitled to dismissal on that ground at the pleading stage. Vanegas v. Signet Builders, Inc., 46 F.4th 636, 645 (7th Cir. 2022). Signet filed a petition for rehearing and rehearing en banc, but the court of appeals denied the petition.

The case was remanded to this court in October 2022. Luna Vanegas has since filed two motions: (1) a motion to amend his complaint to add a new plaintiff, new defendants, and new claims; and (2) a renewed motion for conditional certification of an FLSA collective.

ANALYSIS

A. Motion to amend complaint

Luna Vanegas asks to amend his complaint to: (1) add Jose Luis Garcia Gonzalez as a named plaintiff; (2) allege that Signet's FLSA violations were willful; (3) add as defendants three companies related to Signet, as well as the officers of those companies; and (4) add state-law claims for breach of contract, quantum meruit, and unjust enrichment. Dkt. 92.^[1]Under Federal Rule of Civil Procedure 15(a), the court should freely grant leave to amend when justice so requires. But the court may deny a proposed amendment if the moving party has unduly delayed in filing the motion, if the opposing party would suffer undue prejudice, or if the proposed amendment is futile. Campania Mgmt. Co. v. Rooks, Pitts & Poust, 290 F.3d 843, 848-49 (7th Cir. 2002).

Signet has no objection to adding Garcia Gonzalez as a plaintiff. But it opposes the other proposed amendments on the ground that they are futile. In determining whether amendment is futile, the court considers the proposed amendment under the same standards governing a motion to dismiss for failure to state a claim under rule 12(b)(6). GE Capital Corp. v Lease Resolution Corp., 128 F.3d 1074, 1085 (7th Cir. 1997). So the question is whether the facts alleged in the amended complaint state plausible claims for relief. Taha v. Int'l Bhd. of Teamsters, Local 781, 947 F.3d 464 469 (7th Cir. 2020).

1. Willful violations

Luna Vanegas alleges in his proposed amended complaint that defendants' violations of the FLSA's overtime provisions were willful. See Dkt. 92-1, ¶ 64. Whether defendants' violations were willful determines which statute of limitations applies to Luna Vanegas's FLSA claim: the default limitations period under the FLSA is two years, but willful violations are subject to a three-year statute of limitations. 29 U.S.C. § 255(a). An employer acts willfully when it knows or shows reckless disregard for whether its actions violated the FLSA. McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988).

Luna Vanegas alleges in his amended complaint that “[d]efendants' violations of the FLSA's overtime provisions were willful” and that “[d]efendants showed reckless disregard as to whether its conduct was prohibited by the FLSA.” Dkt. 92-1, ¶ 64. Although those allegations are conclusory, courts in this circuit have consistently held that FLSA plaintiffs do not need to plead specific facts to show that a defendant's violations were willful. See, e.g., Divine v. Volunteers of Am. of Ill., 319 F.Supp.3d 994, 1001 (N.D. Ill. 2018); Kammer v. CET Inc., 2021 WL 2632441, at *2 (N.D. Ind. June 25, 2021). Plaintiffs are unlikely to know facts relevant to the defendant's state of mind prior to discovery. See Ivery v. RMH Franchise Corp., 280 F.Supp.3d 1121, 1135 (N.D. Ill. 2017). So at the pleading stage, “all that is required is a general allegation that the defendant's actions were willful.” Divine, 319 F.Supp.3d at 1001. Luna Vanegas's conclusory allegations are enough to allege a willful FLSA violation at this stage of the case.

Signet contends that it could not have acted recklessly because the Department of Labor certified that Luna Vanegas was performing “agricultural work” when it approved his H-2A guestworker visa. But that argument goes to the ultimate question of whether the alleged violations were willful, which cannot be resolved at the pleading stage. Whether an FLSA violation was willful is a determination normally reserved for the trier of fact. See Bankston v. Illinois, 60 F.3d 1249, 1253 (7th Cir. 1995) (“It is the jury's province to decide which limitations period, two or three years, applies in light of the plaintiffs' evidence that the defendants acted willfully.”). The fact that Luna Vanegas received an agricultural visa will be relevant to determining whether defendants were reckless, but it isn't dispositive. The criteria for receiving an H-2A visa are broader than the FLSA agricultural exemption. See Vanegas v. Signet Builders, Inc., 46 F.4th 636, 645 (7th Cir. 2022). And in any event, Luna Vanegas alleges that defendants mischaracterized the nature of his work on his visa applications. See Dkt. 92-1, ¶ 26. Whether the alleged violations were willful in light of those facts will be resolved later in the case.

2. Claims against new corporate defendants

Luna Vanegas's initial complaint named as defendant only Signet Builders, Inc. Luna Vanegas seeks to add claims against three affiliated entities that managed the construction projects that Luna Vanegas worked on: Signet Construction, LLC, Signet Construction, Inc., and Northridge Construction, Inc. Luna Vanegas alleges that these companies has the same corporate officers as Signet Builders and that all of Signet's companies “operate as a single entity.” Dkt. 92-1, ¶ 11. Luna Vanegas states that he did not originally name the other Signet companies in his initial complaint because he was unaware that he worked for those entities in addition to Signet Builders, Inc.

Signet contends that Luna Vanegas's proposed claims are time-barred. Luna Vanegas last worked for Signet in December 2019. So even if a three-year statute of limitations applies to Luna Vanegas's claims, Signet argues, Luna Vanegas had to amend his complaint by December 2022 for his new claims to be timely. Luna Vanegas filed his proposed amended complaint in February 2023. Luna Vanegas contends that his claims are timely because they relate back to his initial complaint filed in January 2021 and because the statute of limitations should be equitably tolled to account for the year that the case was pending in the court of appeals.

Whether Luna Vanegas's new claims are timely cannot be resolved based on the facts in his complaint. Dismissal based on the statute of limitations is an affirmative defense, and plaintiffs are not required to plead facts to overcome...